Category Archives: News & Politics

The last couple of months have been great for anyone who enjoys a good dose of schadenfreude. First, in Malaysia we’ve had the implosion of the Genneva gold ponzi scheme. The LYN forums have had active threads on them for years. And for years we’ve seen dedicated Gennevarians pop up in the forum to defend the company and claim that it isn’t a ponzi scheme. But then after the raid on October 1st, all of them disappeared from LYN and instead regrouped to their Facebook page which actively censors dissenting opinions.

The amazing thing about the Genneva affair is how many of their so-called customers continue to insist that it is a legitimate business even after the raid. As the LYN crew is fond of pointing out, in Singapore Genneva customers sue the company to get back their money (and the company has repeatedly failed to mount a defense in court cases in Singapore). But in Malaysia, the customers seem likelier to sue the Malaysian Central Bank for killing their golden goose.

Oops, almost forgot to do this feature. Every year I try to highlight the results of the Nobel Prizes that actually matter and aren’t completely spurious. I mean I guarantee that everyone in the Chinese-speaking world knows who won the literature prize and plenty of people who read the news are aware that the Peace Prize committee are keeping up their reputation for bizarre choices by picking the European Union. But how many people know who won the prizes for medicine, physics, chemistry and economics or what the discoveries were for? So that’s what this blog post is all about.

First up, the physics prize was won by Serge Haroche of the Collège de France, in Paris, and David Wineland of America’s National Institute of Standards and Technology. The two independently invented methods of directly observing quantum systems without destroying their superposition of states. Interestingly, they used opposite strategies. Dr. Wineland trapped ions and used photons to control and measure them. Dr. Haroche trapped photons and sent atoms through the trap to measure them. Both are real-life examples of the famous Schrödinger’s cat thought experiment, though on a far smaller macroscopic scale.

It’s time for our monthly round-up of the coolest, most fascinating science articles of the previous month and June 2012 has been an especially bountiful month in that regard. So here goes:

How exactly does mainstream pop music evolve over time? This article from the Pacific Standard summarizes research demonstrating that on general pop music has been getting sadder and sadder over time. This is reflected not only in increasingly negative lyrics but also in the slower tempo and music with mixed emotional cues.

The next article belongs in economics which many dispute is really a science at all, though I tend to disagree. This one is from the Library of Economics and Liberty and talks about how employers in different countries are averse to firing workers in different ways. The survey finds that there are two extremes, reflecting the different values of the countries involved. The Anglo-American business world likes being efficient, even if that means ruthlessness. They are more likely to fire expensive, middle-aged workers with middling performance. The Germans are more sympathetic towards middle-aged workers, preferring to fire a younger worker with comparable performance even if his wages are cheaper.

The Economist has an article on a subject that Thomas Kuhn would no doubt heartily approve of: it is dangerous to generalize findings in experimental psychology too widely. This is because a lot of such research uses test subjects that fall into the same demographic category which the authors of the paper being cited have summed up in a media-savvy acronym: WEIRD. This stands for White, Educated, Industrialized, Rich and Democratic. To solve this, the authors have tried to use crowdsourcing to open surveys to a wider group of participants and since there seems to be an infinite supply of people willing to work for next to nothing on services like Amazon’s Mechanical Turk, it’s dirt cheap too.

Normally the articles I like to select about new scientific discoveries rather than the latest technological gizmos. Gadgets are cool and all, but the years and years of research behind the principles that make them work are the really intellectually interesting part in my opinion. But I make an exception when it’s something that could open up cybernetics in a big way as this article from ExtremeTech explains. It’s an implantable fuel cell that generates electricity from the glucose in the human body. Once installed it can generate electricity indefinitely to power any other cybernetic implants you might have. Heck, there’s no reason why you couldn’t have an external port built into your body to charge your mobile phone or similar device with it. The only cost being that you might feel the need to eat a bit more than usual.

The Turing Test is a well known test to determine the quality of an AI by engaging it in conversation. This article, again from the Pacific Standard, can be thought of as a variation of that. Can sophisticated, specially trained music aficionados tell the difference between a composition that is written by a human and one written by a computer program? It turns out that they can’t as a blind survey of musically knowledgeable listeners revealed that they found computer-composed works just as appealing as those written by real humans.

Finally just for fun, this article from the Mail Online covers one of the greatest scientific achievements of humanity: the Voyager 1 space probe that was launched in 1977 is now leaving the solar system. Incredibly it is still in contact with NASA, despite a communications delay of 16 hours. We probably shouldn’t expect it to be able to keep that up for long once it enters interstellar space.

Strangely enough, despite being 36 years old this year, the upcoming Malaysian general election is the going to be the first one for which I will be in the country as an adult of voting age. Since Malaysian politics bore me in general so this post won’t be about that. Instead, this post will deal with a good question posted by someone in the general LYN stock market trading thread: historically speaking, how does the local stock market respond to elections? Are there any patterns at all? Out of curiosity, I spent some time making charts of the KLCI for the six months before and six months after each of the four previous elections. So here they are:

Last week has been a very exciting time for anyone with any money in the stock markets. The KLCI plunged to lows not seen since the depths of the financial crisis of 2008, then strongly rebounded over the next couple of days. Anyone who had bought SP Setia’s warrants early in the week practically saw their money doubled following the takeover announcement by PNB. This week looks set to be a continuation of the rollercoaster ride though the overall trend remains bearish. I personally expect the markets to edge down for at least the next few months, though there will certainly be plenty of technical rebounds along the way.

The pundits are calling this the return of the financial crisis. For those in the US, it feels more like the crisis merely took a breather and is now back with a vengeance. For middle-class Americans in particular, it has already been a lost decade echoing what happened to Japan. With no end in sight for the European debt crisis and with the Americans set for a rematch between the Republicans and the Democrats over the raising of the debt limit in November, things look certain to grow worse before they can get any better.

What galls me the most however is the fact that this rerun of the crisis is almost entirely due to political factors rather than fundamental economics. Yes, America’s budget deficit looks bad and their debt is growing at an unsustainable pace. But that is really a long-term problem and in the short and medium term, the US debt is perfectly fine. US bond yields are laughably low and there is no prospect of them going up any time soon. With inflation low as well, the US government still has plenty of scope to use fiscal policy to stimulate the economy.

Over the long term, the US debt problem can be attributed almost entirely to healthcare costs. They need to do a fundamental rethink of how much right their citizens have to healthcare and how to distribute those costs. They need to either accept that there is a certain point beyond which each extra month of life that they can give a dying patient isn’t worth the money or to accept that taxes need to raised significantly to pay for the healthcare costs of the elderly. Everything else is a sideshow that buys a bit of extra time but will never resolve the problem until they confront this choice head on.

As for Europe, I agree with The Economist in that the EU needs to man up and draw a line between insolvent and illiquid countries. Greece is insolvent. Everyone knows this no matter how fervently EU authorities deny it. Portugal may or may not be insolvent depending on the next few months. Every other country in the EU currently under pressure in the bond markets is merely illiquid. Insolvent countries need to have their loans restructured, essentially imposing losses on creditors. This would destabilize the EU banking system. So be it. Let bank shareholders eat the losses until their equity is gone, then use public money to recapitalize the banks and rebuild the financial system as necessary. Basically, the EU should bail out banks as institutions, but not their shareholders and not insolvent countries.

In the meantime, illiquid countries need to be given unlimited backing by the rest of the EU. This will increase borrowing costs for safe countries like Germany and the Netherlands, but their public needs to accept this as the cost needed to save the EU.

Naturally, none of this will happen because the political costs are too great. In the US, the Tea Party has successfully sold to the general public the idea that deficits must be cut immediately and savagely without any care of how much damage this would cause to the economy and no politician will dare to say otherwise. Similarly, no politician in the US will dare to tell American citizens that sometimes a tiny incremental improvement in healthcare isn’t worth the massive costs it would incur.

In the EU, singling out Greece would be too humiliating to contemplate and the more often Sarkozy and Merkel declare their infinite support for Greece, the harder it will be to do the right thing no matter how much more worse Greece gets. And of course, any northern politician who dares to tell his voters that they need to pay a bit more tax to help out the southern countries will be cleaned out at the polls in election season, even if this means everyone will be better off in the long run.

This means that both the US and the EU will continue to limp on, kicking the can down the road as far as they are able. Sometimes it sucks to be a democracy.

Just to prove that this blog isn’t quite dead yet, here are a couple of articles for last month. The first of these is a popular story that has been passing around the net a lot recently. It’s about a scientist’s efforts to make meat fit for human consumption from human feces. The other one is a detailed look by Babbage of The Economist at how Bitcoin works. It’s a new virtual currency that been attracted the attention of economists around the world.

The first article is from Digital Trends and introduces us to Mitsuyuki Ikeda of Japan who has managed to develop steaks that are made from proteins that come from human excrement. Many commentators described the process as eating shit but that isn’t really correct. What the scientists have done instead is to use sewage mud as a base on which to grow bacteria. These bacteria turn out to have high protein content, which can be extracted and processed into an artificial steak. It supposedly tastes like beef.

Please take this entire post with a huge grain of salt. I am not an experienced investor and I have no special knowledge of the local market. Plus I can and have been spectacularly wrong. So this is all just amateurish speculative musing. Also, this is mostly written from the perspective of a property investor. If you’re buying something to stay in yourself, you can rarely go wrong so long as you’re happy with what you’re buying.

The talk of the town lately is the ongoing boom in residential property in the Klang Valley. No one in KL could possibly have avoided noticing that double-storey terrace houses in desirable areas are now in the RM700k to RM800k range. That is up from around RM500k just two to three years ago. And prices are still going up with no end in sight. Despite recent moves by Bank Negara to curtail lending for property purchases by limiting loan amounts to 70% of the value of the third property and above, lending has actually increased in the first quarter of the year.